The CIA's fairyland estimates of Moscow's buildup

By
James J. Treires, James J. Treires, chief economist of the Center for Defense Information in Washington, was a government economist for 23 years in the Labor, commerce, and Defense Departments. /
February 1, 1980

For at least a decade, US intelligence agencies have had excellent information on the size, weaponry, and deployment of Soviet armed forces. With today's sophisticated satellites and other types of monitoring, it is impossible foe either superpower to develop, test, and put into operation a significant new weapon system without the knowledge of the other.

How, then, did we suddenly discover that there has been an "unprecedented Soviet military buildup" that now threatens to make the United States the Number Two power in the world? How could the Russians have sneaked up on up when we were watching them closely all the time?

If one carefully studies the military debate over the past few years, it becomes clear that the sudden Soviet buildup occurred not in their arms factories and military bases, but in the accounting department of our Central Intelligence Agency. About three years ago, the CIA analysts decided that their previous estimates of the costm of the Soviet military establishment were way too low, so they simply doubled their old figures.

Americans concerned with our safety in a dangerous world might well ask what difference it makes. If the military has been taking twice as much of the Soviet budget as we had thought, does that tell us anything significant about the threats their forces might pose to American interests? Of course not.

Why, then, is so much emphasis being placed on the allegation (not, as we shall see, a documented fact) that the Soviets are spending 12 to 13 percent of their gross national product (GNP) on national defense while we are spending only a little more than 5 percent? The only obvious reason for making this argument is to convince the American people that we should be spending more.

It is unfortunate but true that reliable information on Soviet military spending is practically nonexistent. The few figures they publish are aggregates that are based on different statistical concepts and conceal as much as they reveal. Furthermore, prices in a socialist economy reflect government policy rather than market values and are therefore a poor indicator of true costs.

Since credible data are not easily available, anyone can play the game of estimating Soviet military spending, and those who put the most effort into the enterprise are the people who have a vested interest in the result. This includes, of course, the CIA and other members of "the intelligence community."

The method used by the CIA to estimate what the Russians are spending is simple in concept but difficult to defend. They estimate ". . .what it would cost to produce and man in the United States a military force of the same size and with the same weapons inventory as that of the USSR and to operate that force as the Soviets do." What the CIA measures, then, is notm what the Soviets actually spend but what they wouldm have spent had they paid their servicemen at US rates, bought their weapons at US prices, and spent the same amount as the US to keep each unit in operation -- none of which they actually do.

This may be a "dollar cost comparison," but it is in no way a valid comparison. All the cost data on the Soviet military are US data. Soviet quantities at US prices equal a fairyland budget. The estimating techniques used and the flimsy assumptions underlying them would be laughable if produced by a private researcher. Only the official aura of a government agency and the implied assurance that the CIA knows more than it is telling enables its estimates to be taken seriously.

We know what forces each side has, and we know what ours cost us. But the CIA tells us we must also know how much they are paying for theirs, as if this money comparison could tell us something we need to know to provide an adequate defense for the United States.

The latest CIA report tells us that the Soviet Union spent 50 percent more than the US in 1979 ($165 billion versus $108 billion) and that, for the 1970-79 decade, they spent almost 30 percent more. Since the US has a GNP about twice that of the USSR, the CIA's figures can only mean that the Soviet people have been undergoing a much greater economic strain than we have experienced. But what does the evidence show?

As the Washington Post noted recently, "Since the beginning of the 1970's, there has been no increase in the average [US] factory worker's take-home pay, the longest plateau of that kind in the country's history." In contrast, it reported in November that "drinking and related problems soar despite increasing Soviet prosperity." While no one claims the Russians enjoy an American standard of living, it is undeniable that theirs has shown some improvement over the past decade while ours has not.

Contrary to what the CIA says, it is the United States, not the Soviet Union, that is overburdened with military expenditures. Our government's exclusive concern with the defense sector and benign neglect of consumer goods industries have so weakened the US economy that it is having great difficulty supporting the military establishment at the current level, let alone the grandiose levels now being talked about.

Anyone who believes the Pentagon's claim that America's current defense burden is the lightest we have borne since 1940 is in for a rude surpirse in the months ahead.